The Modern World Economy
Industrialization sparked trade. In 1913, on the cusp of the 1st World War, the volume of worldwide foreign trade was over 25 times what it had been in 1800. The period of most rapid growth was from the early 1840s to 1873, when total trade went up over 6% per year: 5 times population growth, and 3 times as fast as production increased.
Migration and foreign investment flowed across borders. By the onset of the 20th century world economy was a meaningful term. At the time, Europe was the epicenter of the international trade gyre.
The emergence of global trade owed to the lowering of natural and man-made barriers to trade.
The natural obstacle was the expense of long-distance transportation, especially on land. This was largely solved by railroads, later complemented by complex networks of roadways. In the latter 19th century ocean-going steamships turned the seas into highways.
Containerization – using standardized containers to haul cargo – greatly raised the efficiency and lowered the cost of transport.
Containers were first applied for coal transport in England, beginning in the late 18th century. By the 1830s, railroads on several continents carried container crates that could be transferred to other transport modes.
Steel begin to replace wood after the 2nd World War. The US military was an early adopter.
Commercial seagoing container transport took off in the 1950s. The first container ships were built in 1951.
Standardization of containers was slow in coming, as the capitalist competitive instinct override more sensible cooperation. International standards were first proposed in 1970, but it was over a decade before they were commonly followed.
In the United States, the Interstate Commerce Commission (ICC) was a major obstacle. The government agency was created in 1887 to keep railroads from monopolist practices but became a captive creature of the industry. Only after deregulation in the 1980s, with the ICC cut out of protecting railroad interests, were standardized containers available for US cross-transport between ships, rail, and trucks.
By 2010, 90% of non-bulk cargo carried by ships worldwide was in portable and stackable containers; yet an inefficient plethora of container standards still exist.
The man-made barrier to trade was governmental interference, most often in the form of tariffs, which raised costs enough to render trade uneconomic.
In the 1860s and 1870s, through a set of negotiated treaties, trade among European nations was as free as it would ever be until after World War 2. In the 1st half of the 1860s, the United States was fighting a Civil War, and so more concerned about embargoes on the enemy than international trade.
There were numerous exceptions to freeing trade. Governments still favored domestic industries which had political clout. Though progress has been made to freer trade, economic corruption by special interests remains pervasive throughout the world to this day.
Agriculture holds a particular place of privilege for protectionism. The governments of the United States and Japan have been especially enthusiastic in their coddling of domestic agricultural producers, though practically every industrialized country has protectionist measures for its favored industries, of which agriculture always ranks high.